Northern Ireland economy: Jobs growth to lag despite strong forecast

Northern Ireland's economy is forecast to be one of the better performing UK regions in the next few years.

However, employment growth is expected to lag behind.

The forecast from the National Institute for Economic and Social Research (NIESR) assumes that the economy starts to "reorganise" due to the Northern Ireland Protocol.

It suggests that this reorganisation will lead to improved economic performance overall.

However, it also thinks jobs will be lost in lower productivity industries, which will not be fully replaced by more productive industries.

NIESR's forecast incorporates experimental estimates of economic output produced by the Office for National Statistics (ONS).

It said that while there is substantial uncertainty surrounding these early estimates, they "indicate a stronger recovery from the pandemic in London and parts of Wales, and particularly in Northern Ireland".

It added that "the structure of the Northern Irish economy is undergoing change, with its traded sector becoming comparatively more prominent".

The Northern Ireland Protocol keeps Northern Ireland inside the European Union (EU)'s single market for goods, which means that, unlike the rest of the UK, it continues to have access to the EU single market.

The flipside is that goods coming from Great Britain - Northern Ireland's biggest source of imports - now face a range of checks and controls, which adds costs for businesses.

NIESR forecasts that the output of the local economy will be 1.5% above its pre-pandemic level by the end of this year.

Of the seven UK regions, only London (4.6%) and the North of England (2%) are forecast to recover more strongly.

By the end of 2024, Northern Ireland output is forecast to be 3.3% above the pre-pandemic level, on a par with Wales and behind London (7%) and the North of England (4.1%).

However, Northern Ireland's employment performance is expected to be the worst of all regions, still below the pre-pandemic level by the end of 2024.

NIESR acknowledges that this employment projection "might seen puzzling" when coupled with the output numbers.

However, it said that is because the forecast shows an increase in productivity.

"As the economy is reorganised due to the Northern Ireland Protocol, it is likely that less productive industries start to let workers go and that this labour is only partially taken up by the more productive industries," it added.